Prabhudas Lilladher's research report on Ipca Laboratories
We believe earnings are likely to remain muted over FY21-23E impacted by high COVID base, weak margins and one time issues related to UK and export API business, resulting in stock underperformance. However, in our recent management interaction, the company highlighted that margins are likely to recover as revenues scale up with easing of certain overheads and raw material prices. We expect 31% EPS CAGR over FY23-25E vs 20% EPS decline over FY21-23E on back of strong domestic formulation business (45% of total sales), which continues to outperform IPM. Additionally, export business is also on a gradual recovery mode with UK and export API business expected to normalize by Q4F23. At CMP, stock is trading at 22x FY24E and 18x FY25E P/E. Upgrade to ‘Accumulate’.
We reduce our FY23/FY24 EPS estimates by 6% and introduce FY25 EPS at Rs49/share, even as we upgrade IPCA Lab (IPCA) to ‘Accumulate’ from Hold at TP of Rs 1,000 (earlier Rs 1,010) based on 22x Sept 2024E earnings.
At 16:01 hrs Ipca Laboratories was quoting at Rs 908.75, up Rs 13.45, or 1.50 percent.
It has touched an intraday high of Rs 912.40 and an intraday low of Rs 896.60.
It was trading with volumes of 6,395 shares, compared to its thirty day average of 16,582 shares, a decrease of -61.43 percent.
In the previous trading session, the share closed down 1.03 percent or Rs 9.35 at Rs 895.30.
The share touched its 52-week high Rs 1,228.70 and 52-week low Rs 831.40 on 18 October, 2021 and 13 June, 2022, respectively.
Currently, it is trading 26.04 percent below its 52-week high and 9.3 percent above its 52-week low.
Market capitalisation stands at Rs 23,055.37 crore.
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